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Cisco Offers $1.4bn for Jasper

chuck robbins Cisco

Cisco has announced its intent to acquire Jasper Technologies, a privately held company based in Santa Clara that delivers a cloud-based IoT service platform to help enterprises and service providers launch, manage and monetize IoT services on a global scale. Under the terms of the agreement, Cisco will pay $1.4 billion in cash and assumed equity awards, plus additional retention based incentives.

With Jasper, companies can connect any device – from cars to jet engines to implanted pacemakers – over the cellular networks of the top global service providers, and then manage connectivity of IoT services through Jasper’s Software as a Service (SaaS) platform.

The proposed acquisition will allow Cisco to offer a complete IoT solution that is interoperable across devices and works with IoT service providers, application developers and an ecosystem of partners.

“I am excited about the opportunity for Cisco and Jasper to accelerate how customers recognize the value of the Internet of Things,” said Chuck Robbins (pictured), Cisco Chief Executive Officer. “Together, we can enable service providers, enterprises and the broader ecosystem to connect, automate, manage, and analyze billions of connected things, across any network, creating new revenue streams and opportunities.”

“IoT has become a business imperative across the globe. Enterprises in every industry need integrated solutions that give them complete visibility and control over their connected services, while also being simple to implement, manage and scale,” said Jahangir Mohammed, Jasper Chief Executive Officer. “By coming together, Jasper and Cisco will help mobile operators and enterprises accelerate their IoT success.”

Machina Research has noted in the past that the addition of Jasper’s Control Center connectivity management capability would fill a gap in the Cisco portfolio. Cisco has always had a strong message for enterprises, various vertical sectors, network infrastructure and hardware. However, it lacked the cellular connectivity capabilities to have a truly compelling IoT message for Service Providers. This acquisition bolsters that offering substantially, and is a vote of confidence for the SP business at Cisco. We have always assumed that the price tag in excess of USD1 billion would put off any would-be suitor. It seems that Cisco has been sufficiently convinced of the opportunities in the sector to accept that level of spending. On an analyst call that was held immediately after the announcement, Cisco highlighted that it considers Jasper a key part in a vision it has for multi-technology connectivity – that is, enterprises connecting their assets with a heterogeneous set of network technologies. Cisco wants to bring all relevant pieces under one solution roof, and in this vision Jasper represents the cellular piece. Machina Research has long been of the view that platforms need to be multi-technology, rather than just cellular. This technology agnosticism formed one of our Predictions for IoT in 2016.

Cisco is paying somewhere around 7-8 times revenue for Jasper. In the context of recent acquisitions that seems pretty low, compared to the 20x PTC paid for ThingWorx (see Research Note “Sky-high multiples in company valuations will have negative repercussions for IoT growth”, May 2015, for more discussion on M&A in IoT). However, Jasper is a relatively mature company. It has taken a dominant position in its core market and has sold to most of the potential customers of its core product.